Educational Testing Service - Company Profile, Information, Business Description, History, Background Information on Educational Testing Service

Rosedale Road
Princeton, New Jersey 08541

History of Educational Testing Service

Educational Testing Service is the world's largest administrator of standardized tests and a leader in educational research. The company develops, administers, and scores achievement, occupational and admissions tests, such as the Scholastic Aptitude Test (SAT), for The College Board, as well as for clients in education, government, and business. ETS has six regional offices and annually administers nine million exams in the United States and 180 other countries.

ETS was created in 1947 by three non-profit educational institutions, the American Council on Education, the Carnegie Foundation for the Advancement of Teaching (a part of the larger Carnegie Corporation), and The College Entrance Examination Board. Standardized tests had first been developed and distributed in the early 1930s. In 1930, the Cooperative Test Service of the American Council on Education began to conduct achievement tests at schools and colleges, administering 650 different exams. Six years later, the Educational Records Bureau began using the first test scoring machine, the IBM 805, to expedite the grading of standardized tests administered on a large scale by the Cooperative Test Service. In 1937, the Graduate Record Examinations (GRE) was introduced by the Carnegie Foundation, and the National Teacher Examinations followed shortly.

Although the president of Harvard University had publicly suggested a merger of the three test-giving services in 1937, the emphatic opposition of The College Board's associate secretary forestalled any further movement in this direction throughout the remainder of the 1930s. During World War II, the bulk of the standardized exams given by several test-giving bodies were administered to people enrolled in the military. In 1943, another Harvard administrator, Henry Chauncey, took an 18-month leave of absence from his job to run the Army-Navy College Qualifying Test, which was used to identify officer candidates. In 1945, Chauncey became director of The College Board's Princeton office.

In its pre-war incarnation, The College Board had had a relatively simple and straightforward mission, but its activities had been transformed and greatly expanded during the war years. Instead of simply testing candidates for admission to select colleges, the organization had taken on such diverse functions as making up exams for the State Department, for the military, and for other purposes.

This broadening of functions continued in the wake of the war, when the charitable Carnegie Foundation worked to transfer control of the GRE, which had started as an experiment but had grown to dwarf the rest of the Foundation, to The College Board. At the time of this proposal, The College Board was made up of 52 select member institutions. Absorbing the GRE necessitated a substantial restructuring of the organization, and again raised the issue of a consolidation of test-giving organizations. A committee was formed to examine various proposals, and it began meeting in the fall of 1946. In October, this body recommended the creation of one central test-giving organization.

By the end of 1946, the process of working out the actual details of a merger had begun in earnest among the three founding organizations of the tentatively-named Educational Testing Service (ETS). By June of 1947, difficulties such as the composition of a Board of Trustees had been resolved, and ETS was set up for a trial five-year period. Each of the member groups turned over its testing operations, and a portion of its assets. The Carnegie Foundation contributed the GRE, and the Pre-Engineering Inventory. The American Council on Education added the National Teacher Examinations, and the Cooperative Test Service, while The College Board turned over the Scholastic Aptitude Test (SAT), as well as the Law School Admission Test (LSAT), and several other programs. On December 19, 1947, the New York State Board of Regents chartered the new organization under the name Educational Testing Service.

The new organization set up operations in the old offices of The College Board at 20 Nassau Street in Princeton, New Jersey. Gradually, files, office equipment, and employees from the founding organizations of ETS arrived, until the organization had 212 employees. At the end of 1947, Chauncey was made president of the new organization, which had less than $2 million in initial capital. At the time, ETS elaborated a three-fold goal: to develop and administer tests, to conduct research, and to advise educational institutions.

Among the first clients of the newly-formed ETS were more than 50 colleges, the Association of American Medical Colleges, other foundations, the U.S. Atomic Energy Commission, the U.S. State Department, additional government agencies, the Pepsi-Cola Corporation, and other companies. The organization distributed a wide variety of tests for various assessment purposes. As the ranks of students at American colleges were swelled by soldiers returning from war and enrolling under the G.I. Bill, which promised a free college education to any soldier who had served in World War II, demand grew for ETS's services. In 1948, college admissions exams were taken by 75,000 students.

By 1950, ETS had begun to more fully understand and assess its role in society. In that year, Chauncey proposed in his annual report for ETS that a national census of abilities and talents be undertaken, in order to assist the military, and to strengthen educational and industrial planning. By 1954, ETS had already started to outgrow the building it had purchased on Nassau Street in Princeton, and Chauncey selected a new site for the organization, a 400 acre estate on Rosedale Road in Princeton, which had formerly served as a working farm as well as the Stony Brook Hunt Club.

Throughout the decade, the activities and number of tests administered by ETS continued to grow. In 1958, ETS began to release students' scores on the SAT to their high schools, so that they could in turn be passed on to the students. By the beginning of the 1960s, nearly 25 percent of all American high school students were taking the SAT. By 1962, 15 years after its inception, ETS had become not just a testing organization, but a more broadly-based educational entity.

In addition to expansion in the number of people taking ETS tests, the number of tests available also grew during the 1960s. The organization developed assessments to measure the abilities of people from secondary school right on through their professional career. Along with this growth in the number of tests given, the size and role of ETS expanded as well. On the occasion of the organization's 25th anniversary, ETS dedicated a $3 million conference center, named after Chauncey, its founding president, at its Princeton headquarters. During this time, ETS had also constructed a residence for its president on the Rosedale campus. This construction was made possible by the steady surge in growth ETS had experienced in the postwar years, as the organization's sales doubled every five years between 1948 and the early 1970s.

By the mid-1970s, ETS had become, in effect, the nation's leading testing organization. The organization's tools for measuring ability, particularly the SAT, the GRE, the LSAT, and other tests, had become a standard feature of American educational life. In 1976, the institution was cited as a hot growth company in American business by Forbes magazine. The revenues generated by ETS' activities continued to expand throughout the late 1970s. The company suffered its first serious threat at the end of that decade, when, in response to growing criticism of its monopolistic power, New York state passed the Educational Testing Act, a disclosure law, which required ETS to release certain test questions and graded answer sheets to students.

In the following year, 1980, ETS suffered its first small fiscal deficit. In response, the company reduced its staff and commissioned a strategic plan from a management consulting firm in 1982. Following the enactment of the truth in testing law, ETS suffered further criticism in the early 1980s, as outsiders asserted that its tests were culturally biased to favor white members of the upper middle class, and that they were poor predictors of actual performance.

ETS also took steps to protect its copyrighted materials from violation by entrepreneurs who offered courses to raise student's scores on its exams. In 1982, students who had prepared for achievement tests by taking a Princeton Review course reported that they had already seen some of the questions on the test. This violation of test security, along with others, caused ETS to remove several questions from active use on its exams. In May of 1983, ETS sought and obtained an agreement with the Princeton Review that its workers would not retake the SAT again.

In response to concerns over the format and scope of standardized tests, The College Board undertook a revision of the exams in 1990. ETS announced that the old SAT and achievement tests would, in the future, be known as Scholastic Assessment Tests. The new SAT-I, which measured verbal and mathematical skills, included longer reading passages and more questions to determine how well students had understood them. In the math sections, students were required to work out some answers entirely on their own, with the use of a pocket calculator, rather than simply choosing from answers supplied to them. The SAT-II included a 20-minute essay. These changes, made at the direction of a committee headed by the president of Harvard, were designed to put a greater emphasis on problem solving.

Despite its somewhat embattled place in the culture of American education, ETS continued to thrive materially throughout the late 1980s. By 1990, it had solidified its place as by far the largest American private educational assessment service. The institution had a staff of nearly 3,000 employees, more than 270 clients, including the federal government, and gross revenues of nearly $300 million. Despite this impressive size, ETS sought, as it moved into the 1990s, to expand its activities even further. "Our traditional mission has been to place ourselves at the transitional points of education between high school and college, college and graduate school," ETS's president, Gregory Anrig, told Time magazine in 1990, adding that "now we are expanding into more and more programs that help kids to learn and teachers to teach more effectively."

Among the programs ETS began to offer at this time were educational tools making use of new technology. The company began to develop grammar school courses that used computers and interactive videos to foster critical-thinking skills. In addition, ETS used computers to re-configure the National Teachers Exam. This test was used in about two-thirds of the states to license teachers.

By 1991, ETS's gross revenues had grown to $311 million in revenues, of which 40 percent were derived from College Board activities. The company's roster of exams had ballooned to cover a wide variety of fields, from manicurists to shopping center managers. In addition, ETS had successfully expanded its geographic scope, offering tests in 170 foreign countries. By 1993, the company was administering nine million tests each year.

ETS continued to use new technology to update its tests throughout the early 1990s. In November 1993, the company introduced a computerized version of the GRE, which was slated to eventually replace the old paper-and-pencil version of the test. Rather than simply consisting of the old test on computer, the new exam was to be more adaptive, adjusting its level of difficulty to suit the aptitude of the student taking the test. Students who answered questions correctly were given successively harder questions; students who answered incorrectly prompted the computer to offer easier problems. In this way, ETS hoped to make testing more personalized for each student, provide easier and more frequent scheduling, and immediately provide scores upon conclusion of the test.

ETS began to offer the computerized GRE at 170 testing centers located around the country. In addition, the company was developing computerized testing for nurses, teachers, and architects. With the use of computers, the time needed to take an exam was shortened, but critics worried that the computer itself would prove a barrier to people unfamiliar with the use of machines.

In March 1994, ETS ran into difficulty implementing another new testing program, when disabled students protested the limited number of dates available to them to take the new SAT-I test. After the U.S. Justice Department conducted an inquiry into the matter, ETS scheduled additional dates for disabled students to gain access to the exam. Later that year, ETS also encountered a snag in its admission of the new computerized GRE exam, when employees of a test preparation course who took the new test were able to memorize and later recreate a large portion of the exam after the fact. Presented with this evidence that the repetition of questions had compromised test security, ETS suspended administration of the computerized test for a week in December 1994, in order to tighten a variety of security measures.

One month later, ETS announced that it would reduce the number of times the GRE would be offered by computer, in an effort to limit opportunities for theft. The measure was taken in response to charges that some of the nearly half-million students who sat for the GRE each year were memorizing questions and using them to improve their scores when re-taking the test, or passing them on to their friends, who had not yet taken it. In an effort to prevent test preparation course employees from repeatedly trying to crack the test, ETS also filed suit against Kaplan Educational Centers, the largest such company, alleging copyright infringement and seeking to forbid its employees from retaking the test.

Despite such challenges, ETS remained an important part of American education in the 1990s. The company continued to design tests with input from educators and teachers and contributed policy and measurement research to help America meet its education goals.

Additional Details

Further Reference

Celis, William, III, "Computer Admissions Test Found to Be Ripe for Abuse," New York Times, December 16, 1994.Elson, John, "The Test That Everyone Fears," Time, November 12, 1990.Honan, William, "Computer Admissions Test to Be Given Less Often," New York Times, January 4, 1995.Owen, David, None of the Above: Behind the Myth of Scholastic Aptitude, Boston: Houghton Mifflin, 1985.Nairn, Allan, The Reign of ETS: The Corporation That Makes Up Minds, New York: Ralph Nader, 1980.Tabor, Mary B.W., "Disabled to Get an Extra Chance for S.A.T.s," New York Times, April 1, 1994.Toch, Thomas, "A Stunning Second Lap," U.S. News & World Report, May 18, 1992.Williams, Dennis A., "Testers V. Cram Courses," Newsweek, August 12, 1985.Winerip, Michael, "No. 2 Pencil Fades as Graduate Exam Moves to Computer," New York Times, November 15, 1993.

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